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Updated over 1 year ago on . Most recent reply

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Amir Navabpour
  • Investor
  • Campbell, CA
33
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78
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Ever consider collecting all rent up front for a discount?

Amir Navabpour
  • Investor
  • Campbell, CA
Posted

I know that when a new tenant offers to pay upfront its a red flag. However, for an existing (good) tenant anyone ever consider offering a plan where rent can be paid in advance in return for a discount?  I am in software sales, and this is a common practice we employ when doing deals.  It can be for a 6 month or 1 year period, and have a sliding scale of discounts?  

Why I am thinking about this?  In my experience I have found even good tenants have life circumstance or unforeseen economic hits come that they are not prepared for.  With unemployment at a historical low, inflation remaining sticky and a Fed that is determined to slow down this economy I think it is a foregone conclusion that unemployment will go up substantially, meaning collecting rents can get harder.   

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Nathan Gesner
Property Manager
Agent
Pro Member
  • Real Estate Broker
  • Cody, WY
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Nathan Gesner
Property Manager
Agent
Pro Member
  • Real Estate Broker
  • Cody, WY
ModeratorReplied

No.

1. This is a red flag. Many tenants ask to pay an entire year up front to weasel their way into a rental they otherwise wouldn't qualify for. Many Landlords will see the "easy money" and ignore red flags about the tenant. It's also a way for Tenant A to jump ahead in line of other applicants.

2. The money is not truly earned until it's applied to a charge. If you spend all that money in January and the Tenant breaks their lease six months later, you will have to look for a new tenant and then refund any unused portion of the rent that was prepaid by the departing tenant. If you've already spent it, this could be a serious financial burden. 

  • Nathan Gesner
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